Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Blackwood Bank has the following balance sheet. ASSETS $Amount Rate earned per LIABILITIES & EQUITY $Amount Rate paid per annum annum (million) (million) 3-month Treasury
Blackwood Bank has the following balance sheet. ASSETS $Amount Rate earned per LIABILITIES & EQUITY $Amount Rate paid per annum annum (million) (million) 3-month Treasury notes 90 4% 35 3.5% Overnight interbank funds 7.5% 180-day bank bills 90 6.5% 2-year fixed-rate personal 70 loans 120 7% 4% 30-year floating-rate mortgage loans (rate adjusted monthly) 2-year variable-rate term 70 deposits (rate adjusted quarterly) Non-earning assets 70 0% 95 5.5% 3-year fixed-rate term deposits Equity 60 Total 350 Total 350 (i) Calculate Blackwood Bank's one-year repricing gap (show all workings). (3 marks) (ii) Is Blackwood Bank exposed to losses of Net Interest Income when interest rates rise or fall? Explain your answer marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started